GR Engineering maintains dividend flow

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Thunderbox gold plant in Western Australia

Australian mining services company, GR Engineering, will pay out about A$14.5 million via a 9c-a-share franked interim dividend to shareholders on the back of stronger first-half revenues (plus-10% year-on-year) but a 15% drop in EBITDA compared with the previous corresponding period.

The respected provider of engineering and construction management services booked A$331.9 million of FY23 H1 revenues (versus $302.3m in FY22 H1) and EBITDA of $20.6m ($24.3m).

While it wrapped up work on the Thunderbox gold plant expansion, Abra base metals project and Norseman gold project, all in Western Australia, during the period, its line-up of new contracts includes Thunderbird (mineral sands) West Musgrave (nickel-copper), Bellevue (gold), Cosmos (nickel) and Mt Ida (gold) in WA.

H1 EBITDA was impacted by GR Engineering not hitting forecast profitability targets on its Bluestone Tin projects in Tasmania due to high labour costs and personnel turnover, coupled with generally high cost inflation. “These Tasmanian projects are now substantially complete,” the company said.

It maintained forecast full-year revenue guidance of $500-530 million and said H2 EBITDA margins were expected to improve on the first half.

FY22 revenue and EBITDA were $651.7m and $55.8m, respectively.

“Given the strong balance sheet position, orderbook and pipeline of project opportunities, the board has resolved to declare an interim fully franked dividend of 9c,” managing director Tony Patrizi said.

GR paid out $16.5m of fully franked dividends on its FY22 result in the first half of FY23.

It had net cash of $102m at the end of FY22.

Through market gyrations and COVID, GR has been one of the most consistent dividend payers among mining service companies worldwide in the past decade.

Its share price was trading up today and has risen about 8% so far this year, capitalising the company at $357m.

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